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To: R. Bond who wrote (516)9/30/1998 8:20:00 PM
From: SOROS  Respond to of 1151
 
Israeli Tips Aided U.N. Team in Iraq

By Barton Gellman Washington Post Staff Writer Tuesday, September 29, 1998; Page A1

For more than four years, United Nations arms inspectors have obtained many of their best leads on forbidden Iraqi weapons
through a secretive and diplomatically risky channel from the Israeli government, according to knowledgeable sources in the United
States, Israel and the United Nations.

After a wary start born of Israel's long isolation at the world body, Israel began providing the U.N. Special Commission with
increasingly detailed and sensitive intelligence on its Arab adversary, which launched 40 Scud missiles at Haifa and Tel Aviv during
the 1991 Persian Gulf War. Among its most important contributions, from the U.N. panel's point of view, were significant leads on
the existence of a biological weapons program and the first concrete evidence that Iraq had a systematic campaign of deception to
conceal weapons programs it was legally obliged to declare and dismantle.

The two-way exchange of information, which included meetings with the director and deputy director of Israeli military intelligence,
eventually involved Israeli analysis of aerial photography taken by American U-2 surveillance planes, provision of raw reports from
defectors and other human sources, and Israeli processing of other forms of information obtained by the special commission, known
as UNSCOM.

According to three officials with direct knowledge of the relationship, Israel had become by July 1995 the most important single
contributor among the dozens of U.N. member states that have supplied information to UNSCOM since its creation in April 1991.
The United States, by all accounts, remained a major supplier of information, as well as UNSCOM's most important material and
political backer. But the arrival of fresh Israeli intelligence after most U.S. tips were exploited made for what one official called "this
great big candy store of nice goodies."

There is no evidence that Israel directed UNSCOM's activity in any way, or that the U.N. panel gave information improperly or for
Israel's national benefit. But Israel and UNSCOM have protected the operation among their most sensitive secrets, fearing that Iraq
would use it to feed propaganda attacks that already featured accusations of a Zionist conspiracy behind the commission's work.

Even without evidence, those charges have resonated among intellectuals and in the government-controlled media in much of the
Arab world, including pro-Western Persian Gulf states on which the American-backed U.N. panel has relied for practical and
diplomatic support.

Ewen Buchanan, the spokesman for UNSCOM, said yesterday that the U.N. Security Council resolutions demanding Iraq's
disarmament call upon all member states to assist the panel "in discharging its mandate," and more than 40 countries have "helped
us in the form of experts, information, equipment, finance and in-kind help like laboratory analysis or helicopters."

"As a general principle," he added, "we will not confirm or deny our dealings with particular states."

Israel's U.N. ambassador, Dore Gold, consulted with superiors when asked about the cooperation. When he telephoned back, he
said he could say only that "I cannot give any official Israeli response."

Those willing to speak about the relationship, from UNSCOM's point of view, said the commission had no choice but to seek
assistance from foreign intelligence agencies once the extent of Iraq's concealment efforts became clear. Israel had the means and
motive to assist the disarmament panel, they said, but other adversaries of Iraq – including Iran and some neighboring Arab states –
did so as well.

"I think it's perfectly valid we had contact with the Israelis," said Tim Trevan, a Briton who until 1995 was political adviser to Rolf
Ekeus, UNSCOM's executive chairman until last year. "There's nothing to be ashamed about with that contact."

Trevan, according to other sources, made the first chance link between the commission and the Jewish state. Ekeus had
dispatched him to a January 1994 academic conference on disarmament in Delphi, Greece. There he sat in the audience as David
Ivri, then director general of Israel's Defense Ministry, made disparaging comments about UNSCOM and hinted it was not finding all
of Iraq's hidden weapon programs.

After Trevan stood up to criticize Ivri – arguing that Israel should "put up or shut up," as one participant recalled – another Israeli
pulled him aside and introduced him to Brig. Gen. Yaakov Amidror, who was then deputy director of Israel's Military Intelligence
organization, known by its Hebrew acronym as Aman. Three months later, in April 1994, Amidror flew secretly to New York for a
meeting with Ekeus, said sources with firsthand knowledge.

Scott Ritter, the U.N. inspector who resigned in protest last month, was a central conduit in the unfolding relationship, by his own
account and those of others familiar with the details. Other UNSCOM staff members who traveled to the Aman headquarters in Tel
Aviv's Kirya complex included Frenchman Didier Louis, German Norbert Reinecke and Russian Nikita Smidovich.

The Clinton administration, which was aware of the relationship in detail, generally supported Israel's aid to UNSCOM, but worried
about the political difficulties that might be caused by public disclosure. Even so, the first public hint of the relationship came in a
leak from the U.S. government aimed at discrediting Ritter, disclosing that he was under FBI investigation for his intelligence
contacts with Israel.

Sources said that investigation remains open, and the FBI declined to comment. Current and former U.S. government officials at the
policymaking level and current and former UNSCOM officials said, without dissent, that Ritter's exchange of information with Israel
was approved by his superiors at the commission and, in principle, by the United States.

But some of those officials said there were concerns about Ritter's links with Israel that fell short of criminal suspicion. Ritter on
several occasions brought canisters of U-2 film for processing in Israel, and from time to time allowed Israeli technicians to make
copies, sources said.

There is apparently an unresolved legal question about the ownership of that U-2 imagery, which is normally classified secret in the
United States. Washington had lent the aircraft and its product to UNSCOM. The imagery was stamped with the notation, "REL
UNSCOM/IAEA ONLY," meaning that it could be released to the special commission and to the International Atomic Energy
Agency. U.S. government sources said the CIA's general counsel wrote to the Justice Department, in the context of the Ritter
investigation, that the release to UNSCOM was legally equivalent to declassification for purposes of U.S. espionage law.

Four independent sources with firsthand knowledge said that Ritter and his colleagues worked with the explicit consent of Ekeus,
the Swedish diplomat who was UNSCOM's first executive chairman, and of Richard Butler, Ekeus's Australian successor. The U.N.
panel was aware that Israel – like other cooperating nations, not least the United States – derived valuable military information from
the relationship, but UNSCOM insisted it would provide only such information to Israel as would enable Israeli analysts to assist
UNSCOM.

UNSCOM gave Israel U-2 photographs, for example, so that Israel could apply its own intelligence databases to the structures
depicted, allowing the U.N. panel to combine information from many sources for a fuller picture. Those familiar with the relationship
insist that UNSCOM never "traded" information in return for Israeli help. Still, the relationship eventually raised alarms among some
in the U.S. government. Israel received so much American-shot imagery of Iraqi strategic facilities from UNSCOM, officials said, that
the United States worried it could be held responsible in part if Israel used the pictures to select targets or flight routes for a strike
on Iraq's nonconventional weapons.

There was no doubt that Israel had strong incentives. In 1981, as a French-built nuclear reactor neared completion, Israeli warplanes
launched a preemptive strike to destroy the facility at Osirak. Nine years later, a few months before invading Kuwait, Iraqi President
Saddam Hussein threatened publicly to "burn half of Israel" in what was taken to be a reference to chemical weapons.

Asked whether his cooperation with Israel validated long-standing Iraqi charges that he was an agent of Israeli intelligence, Ritter
said he was not "America's spy or Israel's spy or anyone else's spy," but an inspector working on explicit authority of his superiors.

"That's a diversion," Ritter said. "It's typical Iraqi tactics. The commission wouldn't have had to undertake these extraordinary
measures if Iraq had been forthcoming."

The commission went to Israel, he said, because it was not getting as much help as it wanted from Washington and London on the
most sensitive forms of information-gathering and was looking for another source "with an open mind, with a proven track record of
success."

In September 1994, Israel gave UNSCOM its first major contribution – a detailed allegation that the Special Security Organization,
run by Saddam Hussein's younger son Qusay, was organizing the deception and concealment operation. The tip included physical
descriptions of trucks and depots used to move forbidden materials and documents around the country, sources said.

Later, Israeli information helped provide what sources described as a key to unlocking a biological weapons program Iraq had long
denied: Israel passed along the tip that Oxoid, a company in Basingstoke, England, had sold Iraq 40 tons of a biological growth
medium that the Baghdad government could not account for.

In October and December 1994, Ritter led delegations to Tel Aviv for a meeting with Maj. Gen. Uri Saguy, then the chief of Israeli
military intelligence, and panels of analysts from other Israeli agencies.

Thereafter, Saguy dispatched analysts on a regular basis to New York for meetings with Ritter and his colleagues in hotel
basements and out-of-the-way bars. Sometimes Amidror, Saguy's deputy, traveled personally.



To: R. Bond who wrote (516)10/1/1998 8:50:00 AM
From: SOROS  Read Replies (2) | Respond to of 1151
 
BBC- London - 10/01/98

There are worried economists at the IMF's headquarters

The world economy is in a fragile state with economic growth hanging in the balance, according to the latest forecasts from the
International Monetary Fund (IMF).

In its twice-yearly world economic outlook - released on the eve of its annual meeting in Washington - the IMF reduced its forecast
for world economic growth in 1998 to 2%, down from a forecast of 3.1% made just six months ago.

It described the world economic situation as "unusually fragile" warning a world recession is still possible.

The IMF is not yet predicting a global recession "but clearly we have been approaching that state," said IMF chief economist
Michael Mussa.

He defined a global recession as a year when world economic growth fell below 1%, noting that there has not been a single year in
the past 30 years when the world economy actually shrank.

However, Mr Mussa said that if US economic growth slows more than the IMF is predicting next year, the Asian recession worsens,
and emerging markets suffer a further loss of investor confidence in 1999, this outlook will change.

"That is the worst-case scenario that could push the world economy" into recession, he said.

Risks escalating

The report said: "Chances of significant improvement in 1999 have also diminished and the risks of a deeper, wider and more
prolonged downturn have escalated."

However, it forecast a moderate recovery in global growth to 2.5% next year but added that "a significantly worse outcome is clearly
possible".

Calls for rate cuts

Mr Mussa threw the IMF's weight behind growing global calls for cuts in interest rates to help restore damaged investor confidence.

"The need is to move to easier monetary policy around the world and that is what we are recommending for 90% of the world's
economy," he said.

The IMF welcomed the U.S. Federal Reserve's decision to cut interest rates on Tuesday and said more easing moves may be
needed in the months ahead.

Share markets' role

It also warned that further falls in Western share markets could spark a new panic in Asia creating a vicious cycle of financial
negative shocks.

The report said that if capital flows from the West to emerging markets, especially Latin America, are cut further, the world economy
will have to absorb yet another hit.

If there is a real threat that existing investment capital in Latin America might be withdrawn by Western investors "it can and must
be contained", the IMF warned.

Under scrutiny

The IMF and the World Bank have begun their annual meetings under the scrutiny of government and central bank officials from
around the world amid what could turn out to be the world's worst financial crisis since World War II.

The IMF, under its director Michel Camdessus, is on the front line of Western efforts to contain the contagion which has spread
through the emerging markets of Asia and Russia, threatening Latin America and the West itself.

Fears of economic recession spilling over from affected emerging markets to the Western industrial economies prompted the US
central bank, the Federal Reserve, to cut official interest rates by 0.25 percentage points this week.

Federal Reserve chairman Alan Greenspan has identified the contagion as the major threat to the US economy in coming months
and he is prepared to see rates cut further to ward off a downturn in the US.

The release of forecasts of slower growth by the IMF may well fuel the growing criticism of the global finance authority that it has
largely failed its brief. It has not been able to prevent the spread of the financial crises and the ensuing economic downturns
affecting much of the world.

This has prompted calls by US politicians, UK prime minister Tony Blair and the French president Jacques Chirac for an overhaul of
the IMF.